Overall confidence among U.S. consumers ticked up in August, although it remained within a narrow range that has persisted for the past two years, according to The Conference Board.
The all-time high was recorded in late 2018 at just below 140.
The Conference Board Present Situation Index—a gauge of consumers’ views of current business and labor market conditions—rebounded in August after steadily sliding since late 2023.
Additionally, the organization’s Expectations Index—a metric based on consumers’ short-term outlook for business, income, and labor conditions—rose for the second consecutive month.
Despite the solid headline numbers, consumers “expressed mixed feelings” about a range of issues, Dana M. Peterson, chief economist at The Conference Board, said.
“Compared to July, they were more positive about business conditions, both current and future, but also more concerned about the labor market,” Peterson said in a statement accompanying the preliminary results, which had a cutoff date of Aug. 21.
“Consumers’ assessments of the current labor situation, while still positive, continued to weaken, and assessments of the labor market going forward were more pessimistic.
“This likely reflects the recent increase in unemployment. Consumers were also a bit less positive about future income.”
Consumers were spooked by the three-day market crash earlier this month, with fewer than half (46.9 percent) projecting that stock prices will climb over the next year.
This is down from 50.6 percent in July.
The financial markets cratered earlier this month, with the leading benchmark indexes suffering their worst performances in two years.
Various developments, including recession fears, fueled the selloff.
Since then, Wall Street has recovered on dissipating downturn concerns, and the Federal Reserve is expected to cut interest rates next month.
While consumers alluded more to stock prices and unemployment in their written assessments of the economy, “the proportion of consumers predicting a recession was stable and well below the 2023 peak,” Peterson noted.
Recession odds are low among banks and academic and business economists.
Earlier this summer, Goldman Sachs downgraded the chances of the United States falling into a recession in the next 12 months to 20 percent from 25 percent, citing lower jobless claims and solid retail sales data.
“I don’t think there’s any negative shock at the moment, and it’s rare that the economy just rolls over spontaneously,” David Mericle, U.S. chief economist at Goldman Sachs Research, said.
After first-time unemployment benefit claims touched a one-year high of 250,000 in early August, they have been trending downward.
Retail sales rose at a higher-than-expected pace of 1 percent in July, up from a downwardly revised negative 0.2 percent in June.
The labor market created a smaller-than-expected 114,000 new jobs in July, and the unemployment rate climbed to 4.3 percent, the highest since October 2021.
Average 12-month inflation expectations slowed to 4.9 percent, the lowest level since March 2020, according to The Conference Board. Still, the report notes, “mentions of prices and inflation topped write-in responses.”
Consumers planning to purchase a home declined to a 12-year low. Buying plans for automobiles and big-ticket appliances improved slightly.
The University of Michigan will publish the final reading of the August Consumer Sentiment Index.
The one-year and five-year inflation outlooks were unchanged at 2.9 percent and 3 percent, respectively.
The study found that the public is more optimistic about the strength of the U.S. economy, with those saying they were optimistic climbing to 41 percent in the third quarter from 33 percent in the second quarter.
High-income consumers were more optimistic about the country’s economic health than low- and middle-income consumers.
As with The Conference Board’s findings, McKinsey observed that while inflation has slowed, rising prices and the high cost of living remain the public’s chief concerns.
“This may be due to an ‘inflation overhang,’ or the idea that it takes consumers months, if not years, to adjust to new, higher prices even as inflation stabilizes,” the report states.
Because of an elevated inflationary climate, surveys have repeatedly highlighted consumers’ frustrations with the economic landscape.
Two surveys captured attention after a majority of respondents said the United States was in a recession.
Market watchers have described this as a “vibecession,” a term used to describe the general disconnect between how people feel and how the economy is performing.
Outlooks for the July-to-September quarter suggest that the United States will avert a recession this year.
The bottom line is that there are no signs of a recession in the incoming data,” Torsten Slok, chief economist at Apollo, said.
